Unveiling the Real State of Real Estate in Downtown Calgary
Base10 Capital Advisors released The ABCs of Commercial Real Estate - a Bearish Outlook for Downtown Calgary, a wake-up call to owners, investors, developers and tenants that the economic realities are very different from the picture that has been painted of the downtown Calgary office market.
Using Statistics Canada data and real estate intelligence from Canada's leading provider of national office market data, Base10 analyzes the trends in vacancy rates and absorption in all classes of the Downtown office market, comparing them with current labour market information and oil and gas sector indicators. They conclude that the oft-reported trends and overly optimistic forecasts simply do not add up.
The report provides an independent, objective look at Calgary's downtown office market based on factual and transparent data sources. It looks beyond the market data and discusses what the trends mean and how they are impacting the performance of many assets.
"Sound investment decisions depend on the availability of sound information. There is a lot of incomplete information out there in the office market," says Bryan Slauko, Managing Director at Base10 Capital Advisors. "Whether you're an owner, investor, developer or a tenant in a commercial real estate space, you expect and depend on the availability of reliable, insightful data to make informed decisions. This report arms people with the facts they need."
Key findings include:
- Average Downtown Calgary office vacancy rates are greatly understated.
- 2010 and 2011 office absorption figures are significantly overstated.
- West Core Class B and C spaces face considerable challenges with high average vacancy rates of 17.4% and 16.8% respectively.
- Average Downtown Calgary vacancy rate is forecast to increase significantly to 16% by December 2011.
The future of the Downtown office market in Calgary is not as encouraging as some would have us believe. Owners and investors of Class B and C office assets, in particular, are facing many difficulties due to declining cash flows and significant declines in valuation. This situation requires swift, strategic action to avoid significant crisis and the erosion of many millions of dollars of investors' equity.
Solving these problems requires the sophisticated expertise of professional, experienced service providers and advisors who recognize their role in maximizing the value of an investment in commercial real estate and who have the specialized expertise required in today's market to deal with these issues.
Base10 Capital Advisors is an independent real estate advisory and asset management firm that provides sophisticated, institutional quality expertise to mid-market commercial real estate investors. Base10 builds long-term relationships with its clients by providing independent, professional advice, enabling them to minimize risk and maximize value.
Full report available here.
Click on image to be redirected to YouTube to view video showing vacancies in Downtown Calgary.